Supreme Court Denies Tiffany Appeal Against eBay

By Laura Strachan, Esq. on November 30, 2010 8:55 AM

Tiffany & Co., the famous jewelry line, has lost its bid against eBay and other online retailers in a trademark case that went all the way to the Supreme Court. In a case that has been widely seen as attempting to define trademark responsibilities for online retailers, the Supreme Court did not comment on the denial.

Tiffany & Co.'s suit against eBay dates back to 2004, when the New York-based company sued the internet giant for the trademark infringements of their users. Tiffany essentially argued that eBay should be held liable for operating a marketplace in which the company knows a substantial amount of goods being sold are counterfeit. eBay spends close to $20 million a year in anti-fraud measures but is not individually responsible for the frauds that are perpetrated by their vendors, unless eBay specifically knows of the counterfeit item; and even in those cases the company's obligation is limited to removing the listing.

"It is true that eBay did not itself sell counterfeit Tiffany's goods; only the fraudulent vendors did and that is in part why we conclude that eBay did not infringe on Tiffany's mark," ABC quotes an earlier appeals opinion.

The problem with Tiffany's argument was two-fold: eBay did not know which goods being sold were counterfeit, and the company was not selling the goods but serving as a marketplace for its sellers to connect with buyers. For their part, eBay argued that changes in trademark law need to happen in Congress, not the courts.

Tiffany noted that between 2000 and 2004, eBay earned $4.1 million from sales of Tiffany's goods. In the end, the presence of counterfeit goods on eBay and other online host services is a losing situation across the board. The brand name is tarnished, the online company loses credibility and the buyer has to deal with the counterfeit item he or she believed to be authentic. Better control and regulation are essential to curbing the problem. But that is much easier said than done, in light of the sheer volume of business done online every day.